Volvo Cars Shutters Europe, U.S. Plants as Virus Hits Supplies

(Bloomberg) --

Volvo Cars has started a shutdown of its factories in Europe and the U.S., mirroring similar moves by global carmakers as the coronavirus pandemic wreaks havoc on supply chains and staffing levels.

A flagship plant in Ghent, Belgium, which makes the XC40 SUV, is shuttered until April 5, and other major sites in Gothenburg, Sweden and Charleston, South Carolina, will be closed from March 26 to April 14, the Chinese-Swedish carmaker said in a statement.

“We have limped along for a while, in an increasingly shaky market, with disruptions in the supply chain,” Chief Executive Officer Hakan Samuelsson said in a phone interview. “The worst alternative would be to take half-hearted measures under the gun, so we choose to take more radical steps.”

The list of manufacturers forced to down tools continues to grow as the disease outbreak causes a dearth of components and workers. Companies from Airbus SE to Daimler AG are idling factories, and Swedish seatbelt-and-airbag supplier Autoliv Inc. said Thursday that 63 of its customers’ plants have been or are being shuttered.

By contrast, Volvo’s operation in China is offering a glimmer of hope. All four plants there have reopened, and “showroom traffic is indicating a return to normal in China’s car market,” the company said.

“The signals are very positive, looking at traffic to our dealer showrooms,” the CEO said. “It’s very close to a normal situation.”

Volvo Cars’ high-yield euro bonds maturing January 2025 slid to a record low of 84.7 on Wednesday as the fallout from the pandemic continues to rock global credit markets. The notes were quoted as high as 104.3 a month ago, according to prices compiled by Bloomberg.

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